The sole outcome of the Commonwealth Grants Commission (CGC) — as set out in its Portfolio Budget Statements 2018–19 — is to inform government decisions on the distribution of the goods and services tax (GST) so that horizontal fiscal equalisation (HFE) among the states and territories1 is achieved.
The CGC presented the Report on GST Revenue Sharing Relativities: 2019 Update to the Commonwealth Treasurer — and the states — on 19 February 2019, with public release of the report on 28 February 2019. The relativities were accepted and used in the 2019–20 Commonwealth Budget to share the estimated GST for that year among the states.
The commission continued to progress its review of the methods to be used to calculate the per capita relativities to distribute the GST among the states from 2020–21 (2020 Review). From June to September 2018, the commission and its staff visited all states to consult on the principle of HFE and how it might be implemented in individual expenditure and revenue assessments. Following further substantive consultations with the states on options for each of the commission’s expenditure and revenue assessments, the commission provided its Draft Report on GST Revenue Sharing Relativities: 2020 Review to the Commonwealth Treasurer on 25 June 2019. It was subsequently released to the states.
The 2020 Review is due to conclude in February 2020. Before finalising its report, the CGC will continue to engage with state treasuries and other interested parties. The recommended GST revenue sharing relativities for the 2020–21 financial year will be developed using the 2020 Review methods.
Other significant developments during 2018–19 included the change in Commonwealth legislation ensuring each state and territory receives its fair share of GST funding,2 and funding for the CGC to undertake an ICT transformation and a program to enhance its cybersecurity.
Additionally, at the request of the Department of Infrastructure, Transport, Cities and Regional Development, commission staff also commenced a review into Norfolk Island finances that is scheduled to conclude in September 2019.
(signed) Michael Willcock